American Rescue Plan Act Dependent Care FSA

BACKGROUND

The American Rescue Plan Act (ARPA) has increased the maximum contributions for Dependent Care Flexible Spending Accounts (FSAs) for the 2021 calendar year: 

• The maximums have increased from $2,500 to $5,250 for married individuals filing separately.

• The maximums have increased from $5,000 to $10,500 for individuals or married couples filing jointly.

NEXT STEPS

Namely will update the annual company maximums for Dependent Care FSAs on your behalf. We recommend using the Deduction template in Report Writer to audit your current company and employee contributions to ensure that they are correct for the 2021 calendar year. 

TIP:

If you have any individual maximums, make sure to update them to reflect the new 2021 maximums!
Employees should be mindful of their previous contributions when updating their dependent care election for the year.

Have an employee who needs to increase their Dependent Care FSA election amount under the new maximums? Namely has built a life event, Update Dep FSA, specifically for this election. This life event can be found under Change a Specific Benefit in the Benefit Enrollment Wizard.

TIP:

Reach out to your insurance carrier before you add this life event to your benefit administration site to make sure they're able to accept the increased volume! Many carriers set limits to prevent over-contribution in their platform that may require updates to their systems as well.

Once you have selected this life event in the drop-down menu, refer to Creating Life Events andCreating and Mapping Coverage Lines for more information on how to add this life event and map it to coverage lines.

FREQUENTLY ASKED QUESTIONS

Where can I go to find out more information regarding this new legislation?

You can read the contents of the bill at Congress.gov